QUACKENBUSH REJECTS PROBE : CONSUMER UNION WANTED INVESTIGATION OF AUTO INSURER PROFITS.

Byline: Ron Lent Journal of Commerce

The California Department of Insurance has denied a consumer group's request that the regulator investigate the profits of auto insurance companies.

Consumers Union in June released a study indicating that the average auto carrier profit figure ran 28 percent and policyholders would pay about $55 less on each insured vehicle if Insurance Commissioner Chuck Quackenbush decreased the companies' excessive insurance rates and profits.

The Consumers Union study looked at California's 10 largest auto insurers and their 1995 profits and determined that the companies overcharged California auto policyholders by $800 million. Atlanta actuarial firm Wakely and Associates conducted the survey.

Quackenbush rejected the Consumers Union bid, saying, ``The study was a seriously flawed analysis that relied on outdated information and misleading assumptions. While it's true that auto insurance is a profitable business, those profits do not even approach those claimed by Consumers Union.''

Bill Ahern, Consumers Union senior policy analyst, responded, ``Commissioner Quackenbush has decided to protect excessive auto insurance rates and profits in California.

``The so-called deficiencies Chuck Quackenbush talks about in our study suggest that he has not read his own rate approval regulations. For example, we used a company's statutory surplus in our calculations. Quackenbush said a company's actual surplus should be used, which is directly contrary to the California Code of Regulations.''

``Greater savings are possible if the needless costs associated with minor lawsuits, fraud, and exaggerated medical expenses are eliminated from the auto insurance system,'' Quackenbush said, ``and I invite Consumers Union and others to join me as we work toward that goal.''